Which of the following conjectures that underlie the Keynesian consumption function is not consistent with aggregate U.S. data?
A) The marginal propensity to consume is between 0 and 1.
B) The average propensity to consume decreases as income increases.
C) There is a high correlation between income and consumption.
D) Current income is a determinant of consumption.

Question

Quizplus · Accepted Answer

Aggregate U.S. data has shown that the average propensity to consume actually increases as income increases, contradicting the second conjecture underlying the Keynesian consumption function.

Which of the Following Conjectures That Underlie the Keynesian Consumption